Business forecasting and analysis concerning products are fundamental tasks for many manufacturers, suppliers, retailers, and other enterprises that must furnish products in response to demand from purchasers. From a consumption perspective, products in industries such as automotive, high tech, electronics, appliances, and the like have consumption life cycles (e.g., the time between purchase of the product and the end of its useful life). From a manufacturing perspective, such products have production life cycles (e.g., the entire time of mass production of the product). A product may remain in use for quite some time after the end of mass production. During this time (between the end of the production life cycle and the end of the consumption life cycle), original parts within the product may need to be replaced with service parts to keep the products operating properly. However, manufacturers are typically only responsible to provide such service parts for a specified service lifespan, for example, according to law, regulations, business goals, or any other guidelines depending on the product. As an example, mass production of the 1996 FORD TAURUS model might have ended in April 1997, but as the manufacturer of the model FORD might still be responsible to supply necessary service parts for this model for at least a specified number of years after April 1997.
The phrase “Last Time Buy” quantity for a service part is generally used to refer to the total quantity of demand (such as in the form of purchaser orders) for the service part between a selected point in time after mass production of the associated product ends to the end of the service lifespan for the associated product. A service part is commonly referred as a Last Time Buy part when several years have passed after the end of mass production of the associated product and there is no longer any significant demand for the associated product or its parts. The trigger to start treating a service part as a Last Time Buy part is typically an announcement from the part manufacturer requesting purchasers to initiate final purchases of the service part, as the manufacturer will soon cease providing the service part for purchase.
Forecasting Last Time Buy quantities for service parts is an important issue for industries such as those mentioned above. For example, adequately forecasting Last Time Buy quantities for service parts may significantly reduce inventory costs, improve planning, and increase profitability. However, forecasting Last Time Buy quantities for service parts is a challenging task. Unfortunately, there has been little success developing suitable approaches for estimating future demand for Last Time Buy service parts. For example, one previous approach uses a moving average of order histories to detect a trend (e.g., up, flat, or down) and then uses a different technique to estimate future demand depending on the nature of the trend (e.g., an exponential technique for an up or flat trend or a “stair” technique for a down trend). Problems associated with this and other previous approaches make such approaches inadequate for many needs.